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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 22, 1997
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Statewide Financial Corp.
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(Exact name of registrant as specified in its charter)
New Jersey 0-26546 22-3397900
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(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) Identification No.)
70 Sip Avenue, Jersey City, New Jersey 07306
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (201) 795-4000
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Item 1. Changes in Control of Registrant.
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Not Applicable.
Item 2. Acquisition or Disposition of Assets.
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Not Applicable.
Item 3. Bankruptcy or Receivership.
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Not Applicable.
Item 4. Changes in Registrant's Certifying Accountant.
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Not Applicable.
Item 5. Other Events.
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The Registrant issued a press release dated Tuesday,
July 22, 1997 announcing its second quarter earnings.
Item 6. Resignations of Registrant's Directors.
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Not Applicable.
Item 7. Exhibits and Financial Statements.
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Exhibit No. Description
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99 The Registrant issued a press
release dated Tuesday, July 22,
1997 announcing its second
quarter earnings.
Item 8. Change in fiscal year
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Not Applicable.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, Statewide Financial Corp. has duly caused this report to be
signed on its behalf by the undersigned thereunto duly authorized.
STATEWIDE FINANCIAL CORP.
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(Registrant)
Dated: July 30, 1997 By: Bernard F. Lenihan
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Senior Vice President and
Chief Financial Officer
EXHIBIT INDEX
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CURRENT REPORT ON FORM 8-K
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Exhibit No. Description
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99 The Registrant issued a press release dated
Tuesday, July 22, 1997 announcing its second
quarter earnings.
Statewide Financial Corp. Reports 21% Increase
in Net Income for 2nd Quarter 1997
Jersey City, N.J., July 22, 1997 -- Statewide Financial Corp.
(Nasdaq: SFIN), the holding company for Statewide Savings Bank
S.L.A., today reported net income increased 21% and net interest
income rose nearly 16% for the second quarter which ended June
30, 1997, as compared to the same period in 1996. For the first
two quarters of 1997, net income and net interest income each
grew 18%, compared to the results for the six months which ended
June 30, 1996.
Net income for the second quarter of 1997 was $1,391,000, or
$0.33 per share, compared to $1,154,000, or $0.24 per share, for
the same quarter during 1996. The second quarter figures also
represent an increase over the first quarter of 1997 which had
net income of $1,384,000, or $0.32 per share. For the first six
months of 1997, net income was $2,775,00, or $0.65 per share,
compared to net income of $2,359,000, or $0.49 per share, for
the same period in 1996.
"These results represent solid growth, primarily due to our
strong marketing initiatives and the significant progress we have
made in commercial lending," stated Victor M. Richel, chairman,
president and chief operating officer. "In fact, because of the
opportunity for continued commercial growth, we plan to add more
loan officers and support staff during the remainder of the year."
Richel also noted that "growth in interest-earning assets slowed
during the second quarter of 1997 because declining interest rates
left the commercial market as the only opportunity for investment."
He noted that originations of commercial real estate mortgages and
business loans continued at a strong pace, and that the average
balance of these portfolios increased 15% during the quarter,
mitigating principal amortization within the one- to four-family
mortgage category.
Richel also stated that the Company will conduct the second part
of its previously announced 10% stock repurchase program. In
June of this year, the Office of Thrift Supervision granted
Statewide permission to buy back an additional 5% of its
outstanding stock. The first 5% repurchase program was conducted
in 1996 and early 1997.
The Company's continued emphasis on originating quality commercial
loans and mortgages, and consumer loans, coupled with growth in core
deposits and reductions in higher costing certificates of deposit,
resulted in higher interest rate margins for the quarter and for the
six months ended June 30, 1997, as compared to comparable periods in
the prior year. The net interest margin for the quarter ended June 30,
1997 was 3.77% compared to 3.37% and 3.78% for the quarters ended June
30, 1996, and March 31, 1997, respectively. For the six months ended
June 30, 1997, the net interest margin was 3.77%, compared to 3.40%
for the same period in the prior year.
The Company's total assets were $673.2 million at June 30, 1997,
compared to $677.4 million at March 31, 1997, and $636.0 million at
December 31, 1996. While period-ended balances declined $4.2 million
between March 31, 1997 and June 30, 1997, the average balance of
interest-earning assets increased $6.9 million, including $3.1 million
more in the commercial real estate mortgages and commercial business
loans portfolios, and $2.7 million more in the multi-family mortgage
portfolio. These increases represent second quarter growth of 15.2%
and 32.7% in the respective portfolios, and are a result of continued
emphasis toward origination of higher-yielding, quality loans. The
average balance of the residential one- to four-family mortgage
portfolio decreased approximately $5.2 million, or 2.0%, due to
principal amortization and prepayments. However, the average balance
of mortgage-backed and debt securities increased approximately $5.0
million, or 1.6%, because the Company invested in mortgage-backed
securities which provided better returns and durations than those
which would have been provided by one- to four-family residential real
estate mortgages if the Company had matched the aggressive pricing
within its market areas.
Assets at June 30, 1997, were $37.2 million more than those at
December 31, 1996. The principal component of this increase was
growth in mortgage-backed securities during the first quarter of 1997.
The Company sold securities in the third quarter of 1996 and, during
1997, reinvested the proceeds of this sale into higher yielding
securities.
Deposits totaled $448.5 million at June 30, 1997, representing
decreases of 2.2% and 1.9% from March 31, 1997 and December 31, 1996,
respectively. They represent reductions in higher-costing certificates
of deposit. Lower-costing core deposits increased $1.1 million, or
0.4%, from March 31, 1997, and $4.0 million, or 1.6%, from December
31, 1996. " As we continue to increase our core deposit base by
attracting new customers through product development and by cross
selling our products to existing customers, we find it unnecessary to
match aggressively priced certificates of deposit offered by our
competitors, especially when their rates exceed our alternate
borrowing rates," Richel stated.
Borrowed funds were $153.9 million at June 30, 1997. Of this amount,
$65.9 million mature within 60 days and an additional $28 million, at
an interest rate of 5.54%, are callable at the lender's option within
90 days, and quarterly thereafter for three years. It is the
intention of the Company to keep these borrowing maturities
short-term, subject to prevailing market interest rates, at least into
the fourth quarter of 1997.
Borrowed funds at June 30, 1997 increased $3.7 million over the
preceding quarter, in part to liquidate certificates of deposit for
holders who sought rates higher than the Company's alternate borrowing
rates. The Company's strategy is to not match aggressive rates unless
management believes that relationships with deposit holders who have
other deposit or loan relationships are in jeopardy. At June 30,
1997, borrowed funds had increased $46.7 million over December 31,
1996, supporting asset growth over the period as part of the Company's
continuing strategy to leverage its excess capital.
Shareholders' equity increased $2.5 million during the quarter to
$65.5 million at June 30, 1997 from $63.0 million at March 31, 1997,
but decreased $1.4 million from $66.9 million at December 31, 1996.
The increase from the preceding quarter resulted primarily from net
income of $1.4 million for the quarter and an increase of $2.2 million
(net of tax) in the June 30, 1997 market value of the Company's
investment portfolio over the March 31, 1997 valuation, partially
offset by the repurchase of 62,227 shares of the Company's stock and
declaration of a quarterly dividend. The decrease for the six-month
period of 1997 resulted primarily from the repurchase of 234,727
shares of the Company's stock, and the declaration of two dividends,
partially offset by net income of $2.8 million and allocations of ESOP
shares and other employee benefit plans during the period.
The results of operations for the three and six months ended June 30,
1997 reflect increases in net interest income, after provisions for
loan losses of $0.8 million and $1.9 million, respectively, as
compared to the same periods of the prior year. The increases reflect
growth in average interest-earning assets at higher yields offset by
an increase in borrowing costs due to higher borrowing levels. Net
interest income, after provisions for loan losses, for the three
months ended June 30, 1997 was essentially the same as the preceding
quarter, with net interest margin decreasing one basis point to 3.77%
for the second quarter, from 3.78% for the three months ended March
31, 1997.
This slight decrease results in part from costs to fund the Company's
stock repurchases, partially offset by an higher average balance of
non-interest bearing deposits during the second quarter.
The increase in net interest income in the three- and six-month
periods ended June 30, 1997, as compared to the same periods of the
prior year, was partially offset by reductions of $0.1 million and
$0.4 million in non-interest income, respectively, which resulted from
unaccrued interest income being realized in the prior-year periods and
no like events occurring in the current periods. Excluding these
on-recurring items, non-interest income increased $45,000, or 13%, and
$110,000, or 17%, for the three- and six-month periods ended June 30,
1997 as compared to the same periods of the preceding year. These
increases for the periods resulted primarily from higher mortgage late
charges and deposit account fees, along with increased annuity fees in
the second quarter of 1997. These reasons also account for a $17,000
increase in non-interest income for the three months ended June 30,
1997 over the preceding quarter.
Non-interest expense for the three and six months ended June 30, 1997
totaled $4.3 million and $8.6 million respectively, as compared to
$4.0 million and $7.9 million for the same periods of the prior year
and $4.3 million for the three months ended March 31, 1997. These
year-over-year increases reflect staffing and support costs incurred
to position the Company to achieve its marketing and operational
objectives. The expenses in the current-year periods fully reflect
costs for the Company's Port Liberte branch which opened in October
1996, and its Hoboken branch which opened in March 1996, whereas there
is limited or no expense for these new offices in the prior-year
periods. In addition, the current-year periods fully reflect staffing
costs for commercial and institutional loan officers and support hired
subsequent to September 30, 1996. These periods also reflect
increased furniture, fixtures and equipment, data processing and other
operational costs incurred primarily for the refurbishment of existing
facilities and installation of a new operating system, which occurred
during the third and fourth quarters of 1996. The current-year
periods also include costs for the Recognition and Retention Plans for
Directors, Executive Officers and Employees adopted midway through
1996. Offsetting these expense increases were a lower assessment rate
for deposit insurance and less real estate owned with lower related
expenses. These were incurred during both the three- and six-month
periods ended June 30, 1997.
Statewide Financial Corp., headquartered in Jersey City, is the
holding company for Statewide Savings Bank S.L.A., which maintains 16
branches in Hudson, Union, Bergen and Passaic counties. Statewide
Savings Bank's deposits are insured by the Savings Association
Insurance Fund (SAIF) of the Federal Deposit Insurance Corporation
(FDIC).
SELECTED FINANCIAL CONDITION DATA June 30, December 31,
[dollars in thousands] 1997 1996
Total Assets $ 673,214 $ 636,042
Loans, Net $ 327,871 $ 325,470
Debt and Equity Securities $ 30,245 $ 40,243
Mortgage-backed Securities $ 284,769 $ 240,974
Other Real Estate Owned, Net $ 274 $ 563
Total Deposits $ 448,470 $ 457,056
Borrowed Funds $ 153,900 $ 107,200
Shareholders' Equity $ 65,480 $ 66,935
Book Value per share $ 13.90 $ 13.63
SELECTED OPERATING DATA For the Three For the Six
Months Ended Months Ended
June 30, June 30,
[dollars in thousands] 1997 1996 1997 1996
Interest Income $12,690 $11,452 $25,177 $22,282
Interest Expense 6,435 6,039 12,669 11,668
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Net Interest Income 6,255 5,413 12,508 10,614
Provision For Loan Losses 125 125 250 250
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Net Interest Income After
Provision For Loan Losses 6,130 5,288 12,258 10,364
Non-interest Income 390 514 763 1,180
Foreclosed Real Estate
Expense, Net 7 (5) 14 57
Other Non-interest Expense 4,270 4,004 8,553 7,802
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Income Before Income Taxes 2,243 1,803 4,454 3,685
Income Taxes 852 649 1,679 1,326
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Net Income $ 1,391 $ 1,154 $ 2,775 $ 2,359
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Earnings per share $ 0.33 $ 0.24 $ 0.65 $ 0.49
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Weighted Average Number of
Common Shares Outstanding
to Compute Earnings Per
Share 4,242,171 4,853,965 4,290,775 4,859,075
SELECTED FINANCIAL 1997 1996 1997 1996
RATIOS(1):
Return on Average Assets .82% .70% .82% .74%
Return on Average Capital 8.78% 6.79% 8.67% 6.74%
Capital to Assets 9.73% 9.90% 9.73% 9.90%
Net Interest Rate Spread (2) 3.33% 2.92% 3.33% 2.93%
Net Interest Margin (3) 3.77% 3.37% 3.77% 3.40%
Non-Interest Income to
Average Assets .23% .31% .23% .37%
Non-Interest Expense to
Average Assets 2.51% 2.43% 2.53% 2.46%
Efficiency Ratio (4) 65.60% 70.99% 65.79% 71.32%
Average Interest Earning
Assets to Average Interest
Bearing Liabilities 111.10% 112.07% 111.27% 112.69%
June 30, Dec. 31,
REGULATORY CAPITAL RATIOS: 1997 1996
Tangible Capital Ratio 9.36% 9.41%
Core Capital Ratio 9.36% 9.41%
ASSET QUALITY RATIOS:
Non-Performing Loans to Total Net Loans .79% .84%
Non-Performing Loans to Total Assets .39% .43%
Non-Performing Assets to Total Assets .43% .52%
Allowance for Loan Losses to Non-
Performing Loans 105.65% 95.43%
Allowance for Loan Losses to Total Net
Loans .84% .80%
OTHER DATA
Number of Deposit Accounts 54,727 53,695
Number of Offices 16 16
Notes to Selected Financial Ratios
(1) Ratios are annualized where appropriate.
(2) Interest-rate spread represents the difference between the
weighted average yield on average interest-earning assets
and the weighted average costs of average interest-bearing
liabilities.
(3) Net interest margin represents interest income as a percent
of average interest-earning assets.
(4) Total non-interest expense divided by the sum of net
interest income after provision for loan losses, and
recurring non-interest income.
